The state's finance commissioner had been actively reviewing the management of the Minnesota State Lottery when lottery director George Andersen committed suicide.
Dan McElroy, who is now Gov. Tim Pawlenty's chief of staff, had found enough lapses to warrant a sharp letter to Andersen but he told reporters Thursday he didn't discover anything that suggested Andersen had done anything criminal. He said he isn't sure whether Andersen would have lost his job over the findings.
"I'm not aware of any allegation of any money being stolen or anything that rises to a criminal level," he said. "I wasn't alleging any misdeeds. I was saying we've got too many square feet and we've got too many vehicles. Those are management issues."
McElroy's review, first reported by the Pioneer Press, was separate from an investigation of the lottery by the Office of the Legislative Auditor, which is expected to issue a report on Wednesday. McElroy said he has not seen that report, but has talked to the lottery's interim director about it.
In one letter, McElroy questioned the lottery's sponsorship of a bass fishing tour, the number of cars in its fleet and the size of its Roseville offices.
The letter concluded with the warning that the lottery's status as a semi-public agency "did not give license to the lottery to shirk public accountability or efficiency."
Andersen was found dead outside his Hugo home Jan. 27, a day after he met with legislative auditors.
WCCO-TV reported Thursday night that the former owner of Media Rare, one of the vendors under investigation for its relationship with the lottery, tried to commit suicide 10 days after Andersen took his life. The station said Mike Priesnitz took an overdose of sleeping pills at a Forest Lake motel one day after it interviewed him for a story.
The station said Priesnitz confirmed he had tried to kill himself and that it was over the legislative auditor's investigation of his friend.
"I was just in total despair over how George was put in this position and I couldn't handle it," he said. He said he had not done anything wrong.
Priesnitz sold Media Rare, which does advertising and promotion work for the lottery, in 1999. The station said he has not been questioned by auditors.
Under Minnesota law, the lottery director can be removed by the governor only for cause, which could include poor revenues and inefficient administration.
McElroy said Andersen knew that if he failed to respond to McElroy's suggestions or major problems were discovered by the legislative auditor, Pawlenty could force him out.
"George is so smart. You didn't have to write between the lines for him," McElroy told the Pioneer Press. "He knew what the statute said. I never threatened him or implied a threat."
McElroy said he didn't think his questions "added to his stress level" and that he had been working with Andersen since April to make the lottery more efficient. McElroy said his questions were likely to be different from those raised by the auditor.
"He didn't delegate," McElroy said of Andersen. "He was a merchandizing/sales guy, rather than a business guy. What we were working on was getting solved."
Andersen responded to McElroy's letter on Jan. 20, saying he was "immersed in reviewing the draft" of the legislative auditor's report and would discuss it with McElroy as soon as the auditors allowed him to do so.
McElroy said Pawlenty asked him to work with Andersen after the Minnesota Center for Environmental Advocacy reported that Minnesota was last on a number of measures, including revenues as a percentage of sales, when compared with nine other similar state lotteries. Minnesota also had the highest administrative costs, it said.
McElroy said he met with Andersen about six times and that others from his department met with Andersen at least monthly. Still, by mid-January, there were a number of unresolved issues.
Andersen had contended it was impossible to compare the Minnesota Lottery to those in other states, a position McElroy rejected in his letter to Andersen.
McElroy told the Pioneer Press that Andersen kept saying Minnesota's numbers looked worse because they sell more scratch-off games, while other states do more of the less expensive online games.
Still, McElroy said, Andersen either was procrastinating or did not know how to do a more detailed comparison. The second concern McElroy raised was over some of the lottery's promotions, particularly the bass tour for which the lottery was the chief sponsor.
"Were we doing this because George liked to bass fish or was there a return on the investment?" McElroy asked.
McElroy also suggested the lottery move into state-owed buildings, and said the lottery's car fleet was too large.
Andersen's three-page response conceded the lottery rented more space than it needed and said he would look at other options. Likewise, he said, many of the lottery's cars would be auctioned.
McElroy noted that Andersen did take steps, though sometimes reluctantly, to cut costs. For example, a telemarketing center was closed, some scratch-off games were dropped and advertising and promotion expenses were trimmed.
Lottery statistics show that sales from July through December were $199.5 million, a 6.6 percent increase over the same period a year earlier. In addition, lottery proceeds to the state were up 25.6 percent over the same period a year ago.